Having got used to the simplicity of brokerage accounts in the US, it took me some time to get a handle on how the brokerage accounts are structured and setup in India. Once you ‘get’ it, its not complicated – just painfully fragmented. However, there is typically no simple description that helps you ‘get’ it – so you’ve to play 20 questions and reverse engineer an understanding that works. Here’s what I have learned:

The recent events in the US financial markets have lead to a sharp downturn in India’s markets too. Additionally, with the dollar strengthening against the rupee, the purchase power of the dollar has gone up significantly over the past three-four weeks. These two events, individually but more so coupled together, make considering investments in India very attractive.

Investments in the Indian stock markets has some great advantages. I am often surprised that expats, NRIs and others do not always realize some of the subtle advantages. Beyond being a hot growth area for the past few years (30-40% returns have been the common for a lot of mutual funds), the subtle advantages are on the tax treatment for these invesments. In this note, I’m just focusing on this tax treatment.